12 Oct 2016
Powering Towards an Electric Vehicle Revolution
The State Grid Corporation of China recently announced plans for a national network of electric vehicle (EV) charging stations, comprising more than 100,000 charging stations along 11 major routes to be installed by 2020.
According to the plan, the State Grid will build 10,000 public fast-charging stations, 120,000 charging piles along expressways across the country. The network will extend to Beijing, Tianjin, Hebei, Shandong, all of the cities in Yangtze River Delta (YRD) regions and major cities in all other regions. In total, the installations will service 202 cities along 36,000 kilometres of expressway.
Not surprisingly, industry analysts at the Beijing Electric Vehicle Charging Station Technology and Equipment International Exhibition in July hailed 2016-2017 as the critical year for the growth of companies servicing the sector. According to Pang Lei, Chairman Tellus Power, the specialist EV subsidiary of Hong Kong-headquartered Tusai Holdings, over the last few years his company has drawn up its own development plan for the Chinese mainland.
This initiative envisages building charging facilities radiating out from Beijing, Shanghai and Xian. Facilities would extend across the Beijing-Tianjin-Hebei region, the YRD and the western regions, as well as to several other cities. In total, Mr Pang believes 710 super charging stations and 28,800 charging piles will need be installed across the country, representing an investment of some Rmb3.55 billion (US$536 million).
The Electric Vehicle Charging Interface and Communication Protocol, which came into force at the beginning of January, has standardised charging interfaces across the mainland. Previously, new-energy vehicle manufacturers were thought to be the ones that would decide the specifications of charging piles. As a result, several well-known electric carmakers, including BYD and Tesla, viewed the establishment of a charging piles network as a crucial part of their development plans.
It was believed that whoever took the lead in the distribution of charging piles would emerge as the dominant force in the new-energy vehicle industry. The government's move to standardise the charging interface, however, has changed the industry landscape.
While the new national standard has proved a huge boost for the sector, true success still depends on the development of appropriate new-energy vehicles. Last year proved to be a boom year for such vehicles across the mainland. According to figures from the China Association of Automobile Manufacturers, 340,471 new-energy vehicles were manufactured in 2015, with 331,092 sold to mainland buyers – representing year-on-year increases of 230 per cent and 240 per cent respectively.
Despite the rapid growth in manufacturing and sales, new-energy vehicle sales in 2015 still represented only 1.3 per cent of total car sales that year. This, however, did see sales surpass the one per cent mark for the first time, a significant increase on the 2013 figure when the share was less than 0.1 per cent.
Last year, the National Development and Reform Commission published its Guidelines on the Development of Electric Vehicle Charging Infrastructure (2015-2020), which envisaged that, by 2020, China will need to have 12,000 centralised charging stations and 4.8 million charging piles in order to service some five million electric vehicles across the country.
With the acceptable ratio of charging interfaces to new-energy vehicles seen as at around 1:1, the supply of charging piles in China currently looks certain to fall far short of demand. To remedy this, work on constructing new piles is expected to spike over the next couple of years. By the end of this year, the mainland charging facilities market is expected to be worth Rmb40 billion, breaking the Rmb100 billion barrier by 2020.
The new generation of charging piles does not only supply power, they also analyse data and offer several add-on services. As the future new-energy vehicles are seen as Internet-based smart cars, smart charging piles will also need to be introduced. With this in mind, it was no surprise that smart charging piles featured prominently at the fair, with almost every stand featuring smart technology.
Smart charging piles have several advantages. Up till now, new-energy car drivers using public charging piles had to pay via a prepaid smart card. Operators, however, used their own proprietary cards, obliging EV owners to have four or five different smart cards to access individual charging networks.
With the upgrade to smart technology, car owners pay using smartphones to scan the QR code on the screen of the public charging pile, which is compatible with the WeChat and Alipay payment platforms. The charging duration and fee are displayed on both the charging pile screen and the payment platform.
Apart from payment compatibility and connectivity, smart charging piles have other functions, including providing users with information relating to the weather, air quality, appropriate clothing and Wi-Fi connectivity. By collecting information on user preferences and habits, smart charging piles can also help with route and traffic advice.
Such piles also come equipped with a smart radar that can inform parking management if a charging bay is illegally occupied by a conventional vehicle.
Multiple services offered by smart charging piles ensures their installation is more viable in the short-term, with comparatively few EVs currently on the road. Added-functions open them up to use by drivers of conventional vehicles and pedestrians, increasing the likely return in the short-term.
For more China market opportunities, please visit: http://research.hktdc.com.